Breakfast Commodities at Historic Highs

Soft commodities welcomed the New Year with new multi-year highs. Raw Sugar ICE futures for March delivery rallied to a 29-year high on Tuesday, and traded at an intraday high of 29.8 cents/lbs, its highest level since January 1981, and further extended its rally in a market in which prices rose 128% last year.

Orange juice, cocoa and coffee also rose sharply in 2009 with price increases of 90%, 23.4%, and 21.3% respectively, as these three commodities have beat or nearly outperformed the S&P in the last year which posted gains of 23.5%. Amongst the "breakfast" commodities only milk prices remained low, with a decline of 1.1% in the last year. See the table below for the breakfast commodities yearly % change in the past 10 years, decade % performance, and their 52-week highs/lows.

Frozen concentrated orange juice for March delivery is at a 2-year peak and traded an intraday high of $1.4355/lbs yesterday, its highest levels since 1/3/08, led primarily by fears of crop losses due to frigid temperatures in Florida, the second largest world producer after Brazil. Moreover, orange juice had its best ever yearly performance in 2009 (Data tracking back to 1994 as per Reuters/Thomson), and it is continuing its uptrend, up currently ~15.6% in January so far.

Sugar which was the best performer amongst the breakfast commodities in the past decade with an increase of 340.4% in the past 10 years, also finished 2009 strong with its best yearly performance since 1974 when it rose 301.5%. (Data tracking back to 1961 as per ThomsonReuters) Higher sugar prices have been predominantly supported by supply shortages from the world’s top producer India and Brazil, which have seen torrential rains in what are typically their driest months.

Cocoa ICE future contracts traded in December at a 30-year high level of $3510/ton, its highest peak since February 1979. Cocoa prices have surged in the past 10 years with triple digit gains of 292.95%, making it the second best performer for the decade amongst the breakfast commodities, and recently boosted by supply shortages from the Ivory Coast, which is the top exporter of cocoa.

Coffee ICE future contracts traded in mid-December at a 16-month high, with its highest intraday level reaching $1.495/lb. A coffee rally in 2009 of 21.3% is also due primarily to low production levels in Brazil, Vietnam, and Colombia, the main suppliers which has translated into robust demand, and more than triple digit % gains in the stock prices of coffee roasters for 2009, such as Diedrich Coffee which surged 9581%. See the table below of companies benefiting from the breakfast commodity rally.